Canadian Bank Rate Remains Unchanged at 0.25%

To no one's surprise, the Bank of Canada announced yesterday it was maintaining the bank rate at the effective lower bound of 0.25%. In the press release, the Bank noted that recovery in the third quarter will probably be stronger than predicted in their July Monetary Policy Report, but this will be followed by a "protracted and uneven recuperation phase, which will be heavily reliant on policy support." The reference to policy support is confirmation that interest rates will likely remain at their current levels for some time to come. This was further clarified in the release: "The Governing Council will hold the policy interest rate at the effective lower bound until economic slack is absorbed so that the 2 percent inflation target is sustainably achieved." The release sounded a note of caution, noting that the path of the recovery will be dependent on what happens with COVID-19, and stated the Bank will maintain its current quantitative easing program, under which they are repurchasing at least $5 billion worth of Government of Canada bonds each week. You can read the full announcement here.